The parent company of Tod’s, Diego Della Valle & C, announced that it has come to hold 5.9 percent of the shares in Saks Fifth Avenue, after acquiring 8.5 million shares worth $30.3 million since last February. It has thus become the second-largest shareholder in the U.S. retail company after the Mexican billionaire Carlos Slim, who owns a 17.7 percent stake through Immobiliaria Carso.
Owned by Diego Della Valle himself and by his younger brother, Andrea, their holding company has made many other investments in recent years. Saks, which has 53 department stores and 52 other stores named Off 5th, is a client of Tod’s. Its flagship store on New York’s Fifth Avenue opened an entire floor for shoes two years ago.
Diego Della Valle, who is Tod’s chairman, said he intends to increase his stake in Saks and will present a relaunch plan to the retailer’s management in the coming days. If the plan is approved by management, Della Valle will meet Slim to discuss Saks’ future.
There is speculation that Della Valle could increase his stake in Saks to around 10 percent and that Slim could already be around 19 percent.
Separately, the hedge fund P. Schoenfeld Asset Management, which recently held a 1.5 percent stake in Saks, has called for better governance at the retailer and blamed the company’s management for its poor performance, noting among other things that Saks’ operating margins are much lower than those of its major competitor, Neiman Marcus.
Saks closed the first quarter with a 27 percent drop in revenues to $621.3 million and a net loss of $5.1 million, compared with a profit of $17.3 million in the same period a year ago. Operating income was reduced to $2.2 million from $42.6 million.
Comparable store sales fell by 27.6 percent, and the flagship store in New York scored even worse. Saks’ management is forecasting a double-digit sales decline for the full year, but with a less marked decline in the second half.
Financial analysts were expecting a larger loss and slightly lower revenues for the quarter. In January Saks announced the layoff of 9 percent of its entire staff.